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Why leasehold reform is essential

With a new government comes a new agenda, but some of the same arguments around leasehold reform continue to rumble on. This is perhaps to be expected, given that the UK uses a system of home ownership that is still rooted in medieval history.

Leasehold reform is a thorny issue and one where the law of unintended consequences can run riot. But one thing that is universally popular among nearly all leaseholders is the power to become freeholders.

It isn’t hard to see why; it gives you more control over where you live, makes it easier to sell your property and eliminates the need to pay ground rent. That’s why the government is looking at all available options to make this as smooth a process as possible.

No easy feat

With various obstacles in the way, this isn’t always easy. It can include getting other leaseholders in the property to agree to your plans, the fear that you’re taking on potentially unknown liabilities and the need to pay ‘development value’ for any benefits unlocked by taking on the freehold.

The first two issues can be resolved through a process of advice and education, reassuring tentative leaseholders of the benefits of taking on the freehold and guiding them through what can seem an arduous process.

The final issue though – related to development value – poses greater challenges. This is where leaseholders taking on the freehold need to pay the incumbent a fee based on the ‘value’ that any development on the property could add. Freeholders are, not surprisingly, keen on getting this fee as high as possible.

Calculating this value is often a fine art, and freeholders who are being made to sell their interest are, again unsurprisingly, keen on getting it as high as possible. However, this can often prevent people from doing something that the policymakers want to facilitate.

One of the most popular ways to add value to a block of flats is to maximise the airspace above it – something that we specialise in at Apex. The current law can discourage this from taking place, however, because of the fear that a big fee will have to be paid to the freeholder.

Given this, we believe any reform should bring forward a commitment for leaseholders taking on the freehold to only pay development value during initial build.

Unlocking value

In the first instance, this will stop the inequitable situation of new freeholders paying money for something they may not want to pursue. And, perhaps more importantly, it also means that if they do want to proceed with any development, they will have a means of immediately raising the cash through the value that they’re unlocking.

As with every mooted change to leasehold, there will be those who say it’s unworkable and unfair to freeholders. However, it’s an essential way to give them more control over their own homes, while helping unlock billions across the UK housing market.

Here’s hoping our policymakers step up to the challenge and creative positive change in a housing market craving modernisation and greater accessibility.

By Arshad Bhatti

Source: Property Week

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UK Property Prices Surge at Fastest Rate for 2 Years


  • Annual property price growth in the UK rose to 4.1% in January 2020, the highest rate of growth recorded since February 2018
  • Prices in January increased by 0.4% month-on-month, with market commentators attributing the growth to a ‘Boris bounce’ following the UK’s general election and EU withdrawal
  • Increased activity in the market underlines the rising level of confidence amongst buyers and investors

It’s been a good start to the year for the UK’s property investors.

You may have heard some commentators referring to a ‘Boris bounce’. And it seems that ever since the outcome of December’s general election, which saw Boris Johnson’s Conservative party win a strong majority, there’s been a significant rise in activity in the UK property market.

Now Halifax has revealed its latest index figures for January 2020, revealing that average property prices increased 0.4% from December 2019.

It means that the UK’s annual rate of price growth has now reached a two-year high of 4.1%

This data followed similarly positive figures published by Nationwide at the end of January, which stated that price growth measured by its index is now at a 14-month high.

It seems that, with a new government decided and with the 31st January’s Brexit deadline passed, more buyers and investors are returning to the market. Furthermore, it also suggests that there was a high level of ‘pent up’ demand from those who were waiting to make their next move in the market at the end of 2019.

Russell Galley, Managing Director of Halifax, explained: “A number of important market indicators continue to show signs of improvement. We have seen a pick-up in transactions with more buyer and seller activity consistent with a reduction in uncertainty in the UK economy.”

“Looking ahead, we still expect a moderate rate of house price growth over the course of the year. Demand is likely to continue to exceed the supply of properties for sale across the UK, with the subdued pace of new building also adding to upwards price pressure.”


Source: Select Property

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Cost of buy-to let fixed rate mortgages declines

Research by online mortgage broker Property Master has revealed that the cost of all the fixed rate buy-to-let mortgage categories it tracks are down year-on-year.

Some rates have fallen by nearly £50 per month, which represents a saving of almost £3,000 over the course of a 5-year fixed rate mortgage.

Angus Stewart, chief executive at Property Master, said: “Another fall in the cost of borrowing is very good news for landlords.

“We know that there are landlords languishing on expensive SVR mortgages as the uncertainty around Brexit and political instability has put them off moving on to a more competitive fixed rate.

“With the current record low rates on offer these landlords should act quickly because if the “Boris bounce” becomes a reality it may allow interest rates to begin to rise back to more normal levels.”

“We are expecting a particularly busy next few months.

“This April it will be four years since significant changes were made to Stamp Duty.

“The decision by the then government to slap on a 3% surcharge on buy-to-let properties led to a mini-boom as landlords rushed to buy properties to beat the deadline.

“We suspect many of those landlords will be coming to the end of fixed rate mortgages around now and should be pleasantly surprised at what the market is prepared to offer them in terms of a good deal.”

Property Master’s February 2020 Mortgage Tracker shows the biggest year-on-year fall in cost was for 5-year fixed rate buy-to-let mortgage offers for 65% of the value of a property.

The monthly cost of a typical £150,000 mortgage for 65% of the value of the property fixed for five years fell by £48 per month between February 2019 and February 2020.

Year-on-year falls for 2-year fixed rate buy-to-let mortgage offers were more modest.

The cost of a typical 2-year fixed rate mortgage for £150,000 for 75% of the value of the property was down £25 per month year-on-year and for 65% of the value of a property by £19 per month.

However, both categories are at the lowest level they have been since Property Master began tracking rates in April 2018.

By Jessica Nangle

Source: Mortgage Introducer

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Buy To Let Property Investors Planning Investment In 2020

Buy to let property investors are positive about investment in 2020, according to research from The National Landlord Investment Show.

The research found that 60 per cent of UK landlords and property investors who attend The National Landlord Investment Show are looking to make investment in 2020, among some other interesting insights.

While the general narrative presented by the press about the future of UK landlords has been one that is negative due to high regulations of the private rental market and uncertainties of the UK buy to let market within a post-Brexit context, this new research seems to contradict that viewpoint.

The general feeling from the research was one of positivity looking ahead to the future for UK landlords and property investors is prominent as over half (54 per cent) expressed they are making an investment in 2020 into property to plan for a pension whilst 27 per cent admit they are landlords and property investors to build for their children’s future.

Out of the 60 per cent of UK landlords and property investors who are looking to make investment in 2020, nearly three quarters (71 per cent) have expressed a preference to invest in residential property.

The findings further present a detailed insight into the portfolios of UK landlords and investors attending the show with three quarters (75 per cent) indicating they do not own their properties within a limited company.

Additionally, an increasing number of UK landlords and investors are showing an interest in commercial as well as residential investment opportunities with almost 1 in 4 (23 per cent) now confirming they own commercial properties in their portfolio.

Tracey Hanbury, Director and Co-Founder of The National Landlord Investment Show commented: ‘What this research has shown is that contrary to other opinions within the industry there are exciting times ahead for UK landlords and property professionals.’

Source: Residential Landlord

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Scottish build to rent market set to replicate success of Purpose Built Student Accommodation

Scotland’s build to rent (BTR) residential sector is expected to deliver many years of growth before reaching maturity, according to the results of Ryden’s latest detailed review of the Scottish commercial property market.

While relatively new in Scotland with only two schemes completed to date, Ryden predicts that new entrants to the Scottish BTR market look set to replicate the success of models seen in the North of England, such as family homes as well as large scale city centre apartment blocks, in a similar way to Purpose Built Student Accommodation.

Revealed to commercial property audiences at events in Edinburgh, Glasgow and Aberdeen last week, Ryden’s 85th Scottish Property Review has been expanded to include alternative property asset classes as well as analysing office, industrial, retail & leisure and investment property trends.

According to the report, demand for office space in Glasgow and Edinburgh is robust with many occupiers initiating searches well in advance of their lease events. Glasgow’s grade A supply is all but exhausted and is likely to result in a new headline rental figure for the city, while Edinburgh’s supply is also at record lows with occupiers choosing to renew existing leases rather than relocate, it added.

The industrial market in Glasgow and the west is enjoying a purple patch for pre-let and bespoke premises, partly driven by rising demand for discount groceries and the wider retail sector. Supply of industrial units has reached its lowest level of availability with popular areas commonly seeing rents rise by 20% to 50% at review or renewal. While positive for investment potential, this leaves businesses unable to find premises, constraining their growth.

In the east, unsuitable and obsolescent stock remains a major problem but with new developments due to complete in 2020 market confidence should improve.

Aberdeen is entering a market recovery phase and demand for office accommodation is increasing. Take up is 45% up on 2018 and heading towards the city’s five-year average. Similarly, industrial stock take-up accelerated during 2019, encouraging a number of developers to press ahead with speculative development.

Mark Robertson, Ryden managing partner and Scottish Property Review editor, said: “Forecasts envisage the economic growth rate doubling this year and next, although still below the long run average.

“The early signs in 2020 are that a period of greater political stability – notwithstanding the completion of Brexit and Scotland’s ongoing constitutional debate – is encouraging a more positive property market sentiment, particularly where the market fundamentals are strong.

“Those markets with the correct fundamentals include the nascent BTR residential sector, the prime Glasgow and Edinburgh office and industrial markets, and Aberdeen which is now clearly in the market recovery phase. The retail sector remains challenged, although there are selected, defensive retail submarkets and situations where pricing may now bottom-out.”

Source: Scottish Construction Now

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UK economy registers zero growth in final quarter of 2019

The UK economy flat-lined in the final quarter of 2019, data has shown, as political uncertainty driven by Brexit and the December General Election weighed on activity.

Britain’s services sector – which makes up about 80 per cent of the economy – eked out growth of 0.1 per cent, while manufacturing production slumped 1.1 per cent quarter on quarter, the Office for National Statistics (ONS) said.

The ONS said the UK economy grew 1.4 per cent in 2019 as a whole, bettering 2018’s growth of 1.3 per cent. Over the last year, services grew 1.8 per cent but production fell 1.3 per cent in a tough year for UK manufacturers amid repeatedly delayed Brexit deadlines.

“The underlying picture for production was one of weakening throughout 2019, with nine months of the year showing negative rolling three-month growths,” the ONS said.

However, analysts are looking towards January data to give a more accurate sense of where the economy is headed, given that business sentiment and survey indicators have picked up markedly since Boris Johnson’s landslide December election win.

Firms are grateful for at least some clarity over Brexit, which officially happened at the end of last month. Expectations of an economic pick-up led the Bank of England to hold interest rates at 0.75 per cent at its last meeting.

In December, UK GDP grew by more than expected, registering a 0.3 per cent month on month expansion. This beat expectations of 0.2 per cent growth and the 0.3 per cent contraction seen in November.

The pound climbed after the data was released to stand 0.4 per cent higher against the dollar by 9.45am at $1.294.

Ruth Gregory, senior UK economist at consultancy Capital Economics, said: “While the first estimate of fourth-quarter GDP showed that the economy stagnated at the end of last year, the fourth quarter will probably prove to be the low point.”

“The expenditure breakdown painted a pretty downbeat picture, showing that business investment and net trade drove the drop in GDP, subtracting 0.1 percentage points and 0.3 percentage points respectively.”

Uncertainty remains

The weak UK GDP reading came ahead of chancellor Sajid Javid’s 11 March Budget, which will set the tone for the new Conservative administration which has pledged to boost spending.

Tej Parikh, chief economist at the Institute of Directors, said: “The UK economy ended 2019 in a funk, and despite a recent rise in optimism, businesses will be looking for a significant boost from the chancellor next month.”

Britain has entered the next phase of Brexit negotiations, and has until the end of the year to reach a “deep free-trade agreement” with the European Union. Many businesses are concerned that the tight deadline could result in the UK falling into an effective no-deal Brexit.

“This makes the Budget a crucial moment to get the economy moving,” Parikh said. “The chancellor must clear the way for entrepreneurs to create jobs and drive up productivity, by unleashing investment in start-ups, slashing business rates, and revamping our skills system.”

Other uncertainties also linger over the economy. In a worrying sign for policymakers, UK household spending, which drove growth in 2019 as unemployment plumbed record depths, slumped to a four-year low.

Chris Towner, director at risk adviser Chatham Financial, said: “The question now for the first quarter of 2020 is whether we are going to witness a bounce in activity as a reaction to the healthy majority for the more business-friendly Conservative party. Early shoots of a bounce are starting to appear.”

By Harry Robertson

Source: City AM

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Activity picks up in the north’s housing market during January, new survey suggests

ACTIVITY picked up in the north’s housing market during January, a new survey conducted within the industry suggests.

The first residential market survey of the new decade from RICS (Royal Institution of Chartered Surveyors) and Ulster Bank, found a rise in the number of new buyer enquiries and instructions to sell.

Largely based on the responses from Northern Ireland estate agents, the latest housing report follows two months of consecutive falls in newly agreed sales.

Optimism is also up within the sector, following the decisive win by the Conservatives in December’s general election and the restoration of the Stormont Executive.

But the rise in activity has prompted RICS to once again highlight the availability of housing stock as a key challenge within the market.

The body reported anecdotal response to the survey, citing an insufficient supply of resale properties.

Residential property spokesperson for RICS in Northern Ireland, Samuel Dickey, said: “There has been a clear improvement in sentiment in the housing market with local as well as national political developments likely to be a factor.

“The rise in new sales instructions coming onto the market is a noteworthy and much needed development, given the lack of fresh listings over the past few years.

“Political uncertainty may resurface towards the end of the year but, at this point in time, contributors are optimistic regarding the outlook for activity over the next twelve months.”

Head of personal banking at Ulster Bank, Terry Robb said the lender had noticed a rise in mortgage enquiries and interest in the early part of the year.

“This will likely translate into good sales activity in the months ahead, particularly if more homes come onto the market and available for sale.”

The Northern Ireland survey mirrored similar reports of positive uptakes in the housing market from across the UK.

Property portals and Rightmove both recently reported seeing record traffic to their websites in January.

Last week, Halifax reported that UK house prices increased by 0.4 per cent month-on-month in January – although that report said that it was too early to say if a corner has been turned.

Simon Rubinsohn, RICS chief economist, said: “The latest survey results point to a continued improvement in market sentiment over the month, building on a noticeable pick-up in the immediate aftermath of the general election.

“The rise in new sales instructions coming onto the market is a noteworthy and much needed development, given the lack of fresh listings over the past few years had pushed stock levels to record lows.

“It remains to be seen how long this newfound market momentum is sustained for, and political uncertainty may resurface towards the end of the year.

“But, at this point in time, contributors are optimistic regarding the outlook for activity over the next 12 months.”

By Ryan McAleer

Source: Irish News

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Bank of England’s Mark Carney says infrastructure investment needed to boost growth

Bank of England governor Mark Carney has said more public investment in infrastructure and higher corporate spending is needed to boost the UK’s struggling economy.

Speaking to the House of Lords’ economic committee, Carney also said he expects interest rates to remain low for the foreseeable future as structural factors such as weak productivity weigh on the UK and other economies around the world.

Carney said these ultra-low rates – the UK Bank rate is currently at 0.75 per cent – meant borrowing to spend was appropriate to boost the economy.

“The positive of a low interest rate environment is it does add fiscal capacity,” he said, “so debt servicing costs are expected to be low for a while.”

“This is an environment in which the right infrastructure, the right corporate investment projects make sense and will be necessary in order to ultimately get us out of this situation,” he said.

Carney’s intervention will cheer Prime Minister Boris Johnson, who today gave his official approval to the controversial High Speed 2 rail link and said he would appoint a minister to oversee the project.

Johnson told parliament: “You know this country is being held back by our inadequate infrastructure.”

Earlier today Christine Lagarde, Carney’s counterpart at the European Central Bank, also called on governments to get spending to boost the Eurozone economy.

Lagarde said: “Monetary policy cannot, and should not, be the only game in town.”

Carney’s appearance in front of the Lords committee was the last of his eight years at the helm of the BoE. He will hand over to former Financial Conduct Authority chief and Bank veteran Andrew Bailey on 16 March.

Carney also addressed the UK’s long-running productivity crisis, which has seen output per hour worked – a key driver of economic growth – effectively flat-line since 2008.

He said that in recent years productivity had been held back by low investment due to Brexit uncertainty, raising the prospect that it could recover somewhat in the coming years.

However, he said there are signs that productivity growth has settled at a significantly lower rate than its pre-crisis trend.

Carney said if this is true, “it’s a good time to pass on the reigns to my successor as the disinflationary pressures in this economy are even greater than we expected”.

His warning echoes comments by former BoE deputy governor Sir Charlie Bean who told City A.M. this week that wage stagnation caused by weak productivity could undermine belief in capitalism.

Offering the Lords some of his thoughts on the UK’s productivity slowdown, Carney said poor infrastructure was one cause.

He also said that “the skills gaps” in the country and “the cluster effects” of modern economies were important factors, by boosting some regions at the expense of others.

By Harry Robertson

Source: City AM

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Buy To Let Rental Yields Highest In The North

Buy to let rental yields have been shown to be highest in the North of England, according to a new buy to let index launched by Fleet Mortgages.

The new index found that buy to let rental yields in the north rose the most in the final quarter of 2019, as demand from prospective tenants continued to heavily outstrip supply in the region.

Buy to let rental yields in the north of England reached an average of 9.1 per cent in the fourth quarter of 2019, up from 6.5 per cent in the fourth quarter of 2018.

Landlords in Greater London also saw their buy to let rental yields grow over the same period, enjoying a raise of 0.3 per cent, from 4.8 per cent to 5.1 per cent, while property investors in the South West saw their buy to let rental yields remain steady at 5.5 per cent.

Overall yield growth for England and Wales as a whole rose 0.7 per cent, from 5.4 per cent to 6.1 per cent, according to the index.

The only region where landlords suffered a fall in buy to let rental yields was the North West where they dropped by 0.1 per cent but continue to offer a healthy average return of 7.4 per cent.

Distribution director at Fleet Mortgages, Steve Cox, commented: ‘Clearly, the market has shifted over the past 18-24 months as landlords get to grips with the increased costs that come with private rental sector activity, in particular the phased-in changes to mortgage interest tax relief for individual landlords.

‘Landlords now tend to look differently at their properties, with many converting single-tenancy properties into multi-tenant ones in order to secure better yields.’

He concluded: ‘These higher yields are needed in order meet those growing tax liabilities, but to also offset the increased cost of acquiring tenants and regulation. Examples of these changes include more properties being converted into self-contained flats rather than keeping the property as a larger family home.’

Source: Residential Landlord

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Average rental prices up 2.3%

Average rental price for a new tenancy in the UK was £953 per calendar month in January which is a year-on-year increase of 2.3%, the HomeLet Rental Index has shown.

Rents in London increased by yearly by 2.5%, with the average rent in the capital now standing at £1,627 a month.

This is 71% higher than the UK average.

These figures are higher than the rate of inflation which was recorded at 1.8% in the Consumer Prices Index in December.

Rents in the North West are growing faster than any other region in the UK, whilst London rental growth has decreased over the past three months.

Neil Cobbold, chief sales officer at PayProp, said: “The latest figures show the market resurgence seen in the sales market has extended to the rental sector.

“There was strong annual growth across most regions in January when compared with the same month last year, with impressive growth of over 5% in the North West, Wales, Scotland and the East Midlands.

“However, there were some regional dips last month when compared with December 2019.

“This could be due to the impact of the general election wearing off.

“The decisive election result may have pushed some tenants – that were delaying their move – into action.

“This could have inflated average rents in December due to higher competition for properties.

“This heightened activity may have levelled out, but the generally secure market conditions will be welcomed by letting agencies and landlords.

“There remain some bumps in the road to contend with, including changes to Capital Gains Tax, the final reduction of buy-to-let mortgage interest tax relief and the impact of CMP reform and the Tenant Fees Act throughout 2020.

“Knowing that rents are growing with increases above 5% in some areas will reassure landlords and agents that demand for rental property remains stable as they negotiate a market landscape which continues to evolve.

“Looking forward to the next few weeks and months, there is nothing to suggest rental market prices won’t remain steady with annual growth continuing to rise.”

By Jessica Nangle

Source: Mortgage Introducer